Please answer within 40mins.During 2019, Pam was under water in her house. The house was worth $125,000 but she still owed $200,000 on the mortgage. Because Pam had an FHA loan, the bank decided to forgive the remainder of the loan. Right after the loan was discharged, Pam had total assets of $80,000 and total liabilities of $100,000. How much of the $75,000 loan forgiveness must Pam include in her taxable income? a.$75,000 b.$20,000 c.$0 d.$55,000

As per Mortgage Forgiveness Debt Relief Act of 2007, the loan which is forgiven on a home loan is…

Answered: During 2019, Pam was under water in her…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Please answer within 40mins.

During 2019, Pam was under water in her house. The house was worth $125,000 but she still owed $200,000 on the mortgage. Because Pam had an FHA loan, the bank decided to forgive the remainder of the loan. Right after the loan was discharged, Pam had total assets of $80,000 and total liabilities of $100,000. How much of the $75,000 loan forgiveness must Pam include in her taxable income?

	a.	$75,000
	b.	$20,000
	c.	$0
	d.	$55,000

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